**AUD/USD Breaks Out: New Bullish Impulse Sequence Unfolding Above 0.7140**
*Adapted and expanded from an article by Kelvin Wong, Action Forex.*
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**Introduction: AUD/USD’s Strong Bullish Shift**
The Australian Dollar (AUD) has recently achieved a significant breakout against the US Dollar (USD), moving decisively above the resistance level at 0.7140. This move signals the start of a new bullish, impulsive sequence and could indicate a potential change in the medium-term outlook for AUD/USD. The broader context involves shifts in global risk sentiment, evolving monetary policy expectations, and improving economic indicators for Australia.
In this comprehensive analysis, we will explore the technical and fundamental set-up underpinning AUD/USD’s recent move, discuss potential upside targets, evaluate risks, and situate this development within the macroeconomic picture.
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**Technical Analysis and Chart Structure**
Kelvin Wong’s initial analysis from Action Forex highlighted several pivotal points that merit further exploration:
– **Key Breakout Zone:** The 0.7140 price zone had functioned as significant resistance in recent weeks, halting several bullish attempts. The clean breakout above this level exhibits strong bullish momentum.
– **Bullish Sequence Formation:** The surge above 0.7140 signals the completion of a basing phase and the inception of a new bullish impulsive wave, as per Elliott Wave analysis.
– **Short-Term Chart Patterns:** The daily and four-hourly charts reveal bullish price action structure, characterized by higher highs and higher lows, supporting the case for continued upward potential.
Let’s delve into each technical aspect in detail.
**1. Resistance Turned Support: The 0.7140 Level**
– Served as a ceiling for price action since late May.
– Formed part of a broader consolidation, trapping price between 0.7050 support and 0.7140 resistance.
– The breakout was accompanied by increased trading volume, a sign of conviction among bulls.
– The 0.7140 level now acts as immediate support on any near-term retracement.
**2. Elliott Wave Count and Impulsive Move**
– The impulsive move above 0.7140 marks the possible beginning of a Wave 3 scenario in Elliott Wave Theory, following a corrective Wave 2 pullback that respected the 0.7050 area.
– Wave 3 sequences are typically the longest and most powerful in a bullish cycle, often exceeding the length of the prior upturns.
– The impulsive structure is further validated by the rhythm of clear higher lows and expanding upward candles.
**3. Momentum Oscillators and Trend Indicators**
– Relative Strength Index (RSI) on the daily chart has surged past 60, suggesting strong upside momentum but not yet overbought conditions.
– MACD histogram is rising above its signal line, supporting a bullish view.
– Short- to medium-term moving averages (such as the 21-day and 50-day EMAs
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